facebook_pixel

Demand for Quality Cotton Supporting Bull Market

The kindling underneath the cotton market caught a few sparks this week as the nearby May contract climbed back to near 93 cents. Yet, the struggle of the new crop December contract to climb to 80 cents continues, as new crop advanced only one cent for every three in old crop.

This emphasizes the market’s immediate need for quality, particularly machine-picked quality cotton.

The week began with the USDA March Supply Demand report. Changes made by USDA were generally expected, but had not been fully accounted for in the market. Thus, the report provided psychological support to the bulls’ hope. We did see USDA finally bite the bullet and increase exports 200,000 bales, thus reducing U.S. carryover to 2.8 million bales. If the market fails to climb to 94-96 cents, then exports will move even higher.

In a later USDA report, export sales and shipments also added a bit of momentum to the market’s price rise. Sales were larger than expected, and shipments remained strong. Look for the market to continue its bullish attitude, but one should also expect very volatile price movement.

As earlier referenced, an increasing number of mills are looking for quality machine-picked cotton. Why? The reason is that today’s new textile machinery was specifically manufactured for such cotton, for ring spinning. Too, this is also supported by the fact that a good bit of the export cancellations have been for shorter staple cotton that had been destined for use on the older and coarser open-end spinning system. The demand for denim remains strong, if and only if, it was produced on the ring spinning system. Denim produced on the open-end system pales in both quality and consumer preference with respect to ring-spun denim.

Net export sales for the most recent week totaled 135,200 RB, including 60,500 RB of Upland for current year shipment (by 7-31-2014), 8,300 RB of Pima and another 120,400 RB of Upland for 2014-15 delivery. The weekly average price for these sales was 89.36 cents, basis the May contract. Additionally – and underlying the widespread demand for quality and machine harvested – some 20 countries bought U.S. cotton at this price.

Export shipments totaled 264,200 RB of Upland and 10,300 bales of Pima. While shipments are on pace to reach the USDA forecast for the year, weekly sales must average nearly 104,000 RB to reach the USDA projection.

Looking at the 2014 crop and the 2014-15 marketing year (Aug 1, 2014-July 31, 2015), I may be becoming a bit wishy-washy on you. If I am, then it is because I see a glimmer of hope for potentially higher prices than that I have been discussing for months.

I have felt for some time that 80-83 cents, basis December, was the most for which we could hope. Certainly, I continue to feel that is the most likely case. Yet, a few weather problems could drop world stocks as much as ten million bales, dramatically increasing the price for quality cotton, but only for quality cotton. There is a vast supply of average-to-questionable quality cotton outside the U.S.

While quality will always be in demand, another price charge will do overreaching and long term damage to both U.S. and world production. The five-year old quiet takeover of market share by chemical fibers has brought cotton demand down to near its knees. This short term trend is promising to become long term, and if successful, will be devastating to the U.S. and world cotton industry.

We are at the door of disaster, and as such, the cotton industry must begin to plan for immediate drastic defensive and offensive action. Slamming this idea will do one any good. Anyway, they would be 50 years too late for that. That line already circumvents the globe. More importantly, it would only serve to expand the ostrich gene pool. Unfortunately, this new generation of U.S. and world consumers has little knowledge of why cotton was king, and it is going to require more effort on our part than ever put forth to explain why.

Leave a Reply

International Stories
International

Kai Hughes Named ICAC Executive Director

July 5, 2017

Kai Hughes has been named the new Executive Director of the International Cotton Advisory Committee.

International

International Cotton Leader Showcases Innovations

July 12, 2017

Cotton Incorporated’s Kater Hake urged India producers to find new applications and functionalities for cotton and textile production.

International

Indian Textile Industry Aims to Reach $650 Billion by 2025

July 5, 2017

India’s Prime Minister has urged the country’s textiles sector to reach $650 billion by 2025.

International

Collective Effort Needed to Advance Cotton Industry

May 5, 2017

The cotton industry needs a collective effort by all of its stakeholders to advance.

International

Register Now for ACSA International Cotton Institute

April 12, 2017

This summer, some of cotton’s young minds will gather to learn business details at the ACSA International Cotton Institute.

International

Cotton Industry Veterans Launch New Commodities Firm

April 11, 2017

Three veteran analysts and traders have combined their collective 60+ years of cotton industry experience to form the Rose Commodity Group.

International

Global Cotton Contract All Hope, No Action?

April 10, 2017

The ICE Global Cotton Futures Contract is fighting for market traction, with no significant trading volume since June 2016.

Around The Gin
Product News

Protect Cotton Potential from Weeds, Worms and Diseases

July 12, 2017

Southeast cotton producers say latest technologies from PhytoGen help protect yield and quality.

Product News

Monsanto “Troubled” by Arkansas Dicamba Decision

June 26, 2017

Monsanto has weighed in on the Arkansas Plant Board’s proposed ban of dicamba use in the state.

Product News

Drexel Adds Two Regional Sales Reps

June 16, 2017

Kyle Herring and David Davis have joined Drexel Chemical Company as regional sales representatives.

Product News

Dow AgroSciences Launching Enlist Corn in 2018

June 16, 2017

Following the launch of Enlist cotton, Dow AgroSciences will make Enlist corn commercially available for 2018 after receiving Chinese import approvals.

Product News

Transform Earns Section 18 Exemptions for Cotton, Sorghum

May 4, 2017

Transform WG insecticide has received Section 18 emergency use exemptions for use in cotton and sorghum in select states for the 2017 production season.

Product News

EPA Approves Monsanto’s NemaStrike Technology

May 2, 2017

The EPA has issued registration for tioxazafen, a new nematicide from Monsanto that will be branded as NemaStrike Technology for nematode control and yield protection in cotton, corn and soybeans.

Product News

Indigo Partners Launched for In-Field Technology Testing

April 25, 2017

Indigo is launching Indigo Partners, a collaboration of 25 U.S. growers and agronomic experts to test agricultural technologies – including Indigo’s microbial seed treatments – during 2017.

Product News

UPI Adds New Herbicide Products

April 14, 2017

UPI has added two new herbicides to its portfolio of high quality crop protection products for the U.S.

Latest News
International

International Cotton Leader Showcases Innovations

July 12, 2017

Cotton Incorporated’s Kater Hake urged India producers to find new applications and functionalities for cotton and textile production.

International

Kai Hughes Named ICAC Executive Director

July 5, 2017

Kai Hughes has been named the new Executive Director of the International Cotton Advisory Committee.

International

Indian Textile Industry Aims to Reach $650 Billion by 2025

July 5, 2017

India’s Prime Minister has urged the country’s textiles sector to reach $650 billion by 2025.

International

Indian Company Debuts Cotton for Technical Textiles

June 22, 2017

A company based in South India has developed mechanically-processed cotton varieties suitable for use in absorbent technical textiles products.

International

India Expects 20% More Cotton in 2017/18

May 10, 2017

India’s cotton crop for the season beginning in October 2017 may see up to a 20% percent increase in production.

International

Collective Effort Needed to Advance Cotton Industry

May 5, 2017

The cotton industry needs a collective effort by all of its stakeholders to advance.

International

Register Now for ACSA International Cotton Institute

April 12, 2017

This summer, some of cotton’s young minds will gather to learn business details at the ACSA International Cotton Institute.

International

Cotton Industry Veterans Launch New Commodities Firm

April 11, 2017

Three veteran analysts and traders have combined their collective 60+ years of cotton industry experience to form the Rose Commodity Group.

International

Global Cotton Contract All Hope, No Action?

April 10, 2017

The ICE Global Cotton Futures Contract is fighting for market traction, with no significant trading volume since June 2016.

International

Indian Cotton Situation Currently Stable

March 17, 2017

The cotton situation in India from both producers’ and users’ points of view seems to be stable.

International

Enrollment Open for Texas International Cotton School

February 28, 2017

Registration is open for the 37th session of the Texas International Cotton School, scheduled for August 7-17 in Lubbock.

International

Indian Cotton Consumption to Increase Slightly

February 22, 2017

The Cotton Association of India now expects domestic consumption and imports of cotton to be higher than originally estimated.

International

Innovations in Nonwovens Focus of International Conference

February 22, 2017

The Technical Association of Pulp and Paper Industry will hold its Innovative Nonwovens Conference (NETInc) April 23-26 in Minneapolis, MN.

International

Indian Cotton Crop Estimated at 34.1 Million Bales

January 24, 2017

India is estimated to produce 34.1 million cotton bales during the season ending September 2017.

International

Steady Rise in Indian Cotton Prices

January 23, 2017

While global cotton production is increasing, the cotton situation in India is getting serious attention due to a steady rise in prices.